Exploring the Impact of Private Equity on the Sports Industry

What Is Private Equity?

Private equity involves investing in companies that are not publicly traded. Unlike traditional stock investments, private equity typically carries higher risk and is not easily converted into cash.

Liquid investments can be sold quickly with minimal loss in value, while non-liquid (or illiquid) investments take longer to sell and may lose value in the process. Private equity falls into the latter category, which can create challenges when applied to industries that rely on steady cash flow, including sports.

Understanding Private Equity Investments

Private equity investments often pool money from multiple investors into a fund managed by a private equity firm. The firm, known as the general partner, is responsible for managing the fund and making investment decisions. Investors, called limited partners, contribute capital but do not take part in daily operations. Together, they form a limited partnership that defines roles, responsibilities, and profit-sharing.

These funds often use leverage—borrowing money to finance acquisitions—to restructure and grow companies outside the pressures of public markets. The goal is to increase the company’s value and eventually sell the stake for a profit.

Benefits for Companies

For companies, private equity provides an alternative source of funding with less public scrutiny. This can allow leadership to focus on long-term strategy rather than short-term market expectations. In some cases, this long-term growth path may eventually lead to a public offering.

Impact of Private Equity on Sports

Private equity has increasingly entered the sports industry, particularly youth sports, which has grown into a $40 billion market. Major investment firms have begun acquiring youth sports facilities, leagues, and programs in an effort to consolidate operations and expand participation.

With roughly 60 million children participating in organized sports and average annual spending of $1,016 per child, the sector presents significant growth potential. However, increased private investment can also lead to higher participation fees, placing additional financial pressure on families.

Case Study: University of Utah

The University of Utah has recently restructured parts of its athletic operations into a new entity, Utah Brands & Entertainment. This organization will oversee ticketing, events, sponsorships, and NIL-related activities, with a projected goal of generating $500 million. While the initiative aims to strengthen financial performance, critics argue that many athletic departments already struggle with rising expenses rather than insufficient revenue.

Comparing Athletic Department Finances

Financial performance varies widely across conferences and programs:

• University of Utah Athletics reported $115.7 million in revenue in FY2022 and a projected $17 million deficit in FY2024.

• Old Dominion University Athletics generated approximately $4.3 million in revenue in 2023–24 and raised $18 million in 2022.

• Alabama Athletics reported $234.8 million in revenue in FY2024 after recovering from a $28 million loss the previous year.

Major Expenses in College Athletics

Athletic departments face rising costs across several areas, including facilities management, equipment and apparel, scholarships, coaching and staff salaries, travel, and program-related expenses. Personnel costs, in particular, remain one of the largest and most consistent financial pressures.

Conclusion

Private equity can provide valuable financial support to sports organizations, but it also raises important questions about affordability, access, and long-term priorities. The impact on ticket pricing, student access, and athlete support will depend less on the presence of capital and more on how that capital is managed. As private investment continues to enter the sports landscape, its success will ultimately be measured by who benefits—and who may be left behind.

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Sources & Further Reading

• Joe Drape and Ken Belson, New York Times — Reporting on private equity investment and consolidation in youth sports

• Moonfare — Overview and explanation of private equity structures and characteristics

• Alex Sherman and Cora Brewer, CNBC Sport — Coverage of the University of Utah’s private equity partnership and evolving college athletics business models

• Nick Kelly, The Tuscaloosa News — Reporting on Alabama athletics revenue, expenses, and financial disclosures

• Old Dominion University Athletics — Public announcements and financial reporting on fundraising and athletic department revenue

• NCAA — Revenues and Expenses Report for Division I athletic programs

• Dan Wetzel, ESPN — Commentary and analysis on spending patterns and structural challenges in college athletics